Embarrassing for Social Action

It was a bad day for the welfare lobby yesterday.

The figures bore down on them from all sides, and they didn't know what to say for all their embarrassment.

For years they have been claiming that the government's "piggish capitalist" policies will bring us to an economic and social crisis, a deep recession, mass unemployment and utter poverty. But the objective facts have come back to haunt them - time after time.

They said that instead of cutting back and keeping to a lean budget, instead of privatization, instead of initiating reforms and structural changes, and instead of lowering taxes, we needed to raise government spending and parcel out money to everyone.

They said that in order to pay for the this benevolent spending, we need to raise taxes on the "rich." And who are these "rich" people? Those who earn a shekel more than they do.

Yesterday they had a particularly hard day, because too much good economic news was announced all at once. Growth is rising - an annualized 6.6 percent for the first half of 2007 - and unemployment is dropping, by an annualized 7.6 percent for the second quarter.

The Bank of Israel's State of the Economy Index was up sharply - 3 percent in the last three months. This is what brought Bank of Israel Governor Stanley Fischer to say that Israel's economic condition is "good, maybe even very good."

The standard of living as measured by private per-capita consumption jumped 5.7 percent.

However, the most important figure published yesterday is related to the unemployment - and employment - situation. Because rapid growth is not a goal in itself. It is only a means to reduce unemployment and enable all of us to have a higher standard of living.

Unemployment, which stood at 11.2 percent at the height of the 2003 crisis, has dropped to only 7.6 percent

But this boring number can be translated into something we can all understand: Over the past four years, 372,000 people left the degrading condition of unemployment, obtaining employment and life with honor. This is the proper social answer to poverty and depravation.

Wages also improved. They rose by 5 percent over the past two years, and the minimum wage increased, too. The good news is that salaries are expected to continue to rise as a result of the increased demand for workers.

Will we see 6.6 percent growth for all of 2007? Probably not. It is more reasonable to assume that growth will slow. But 5 percent a year is not bad, either.

When the trend first started, some claimed it was limited to the high-tech industry. But that was only the start. And in order to preserve this, we need to continue budgetary restraint, lower taxes, reforms and privatization.

Because growth is one of the conditions for social improvements. Only when there is rapid growth do tax revenues increase, and the cabinet can - and must - help those who cannot work.